Buffett cautions social-networking investors

Warren Buffett is warning investors to be careful about which social networks they friend with their investment dollars.

Buffett, the chief executive of the Berkshire Hathaway investment empire, warned investors Friday at a conference in New Delhi to be wary of social networks such as Facebook and Twitter--a sector that has recently generated great interest and anticipation on Wall Street.

"Most of them will be overpriced," Buffett said, according to a Bloomberg report. "It's extremely difficult to value social-networking-site companies."

"Some will be huge winners, which will make up for the rest," he said, without specifying which companies he expects to be winners and which will be losers.

Buffett isn't alone in his dire warnings of another bubble in the offing. IAC founder and former entertainment mogul Barry Diller recently called the multibillion-dollar valuations of social-networking companies with high user engagement but unproven long-term revenue "mathematically insane."

Investor buzz for hot Silicon Valley companies that aren't yet publicly traded--like Facebook, Twitter, and Zynga--has hit a fever pitch and reportedly captured the attention of the U.S. Securities and Exchange Commission. The commission is reportedly interested in companies that offer exchanges for privately traded stock and along the way offer a peek at the hypothetical valuations of these otherwise tight-lipped companies.

Of course, Facebook is still a private company and is under no obligation to reveal its financial details. However, should Facebook hit the threshold of 500 individual shareholders, it will be required to either start trading publicly or at least begin disclosing its financial information, according to rules set by the U.S. Securities and Exchange Commission.

Two-year-old daily deals site Groupon, which reportedly turned down a $6 billion buyout offer from Google late last year in favor of a hoped-for $25 billion IPO, is estimated to be bringing in $103 million in revenue. LivingSocial, which thinks it could overtake Groupon this year, recently sealed a $175 million investment from Amazon that gave it a $1 billion valuation.